E-levy bites MTN as share price falls 18.9%

The local equities market appears to be reeling from effects of the Electronic Transfer Levy (E-levy), as the runaway leader in volume and value categories – MTN – has seen its share price fall in the weeks following introduction of the E-levy, dragging the market down with it.

Historically responsible for about 80 percent of trades on the market, the technology stock has lost 18.9 percent off its year-beginning price valuation of GH¢1.11 and currently ranks at number 32 on the Ghana Stock Exchange (GSE) in terms of year-to-date (YTD) performance.

The drop is consistent with a slump that began about six months ago – around the levy’s announcement in November 2021 – and has seen the stock lose 29 percent of its value in that period.

This is especially concerning as the stock lost 10 percent of value over the course of the last four weeks.

Consequently, the GSE’s benchmark Composite Index (GSE-CI) – which gives a measure of the entire market’s performance – has dropped by 8.16 percent YTD… beginning the third week of May at circa 2,561.83 points.

Offering thoughts on the subject, market analyst with Apakan Securities Limited, Edem Nickolas Kporku, said while the impact’s full effect is yet to be ascertained, performance of the telco’s stock over the past few weeks indicates investor reaction to the levy.

“I think it has affected MTN a lot. Implementation of the E-levy will affect MTN’s MoMo collections as people will stop using MoMo to avoid the tax… We saw some decline in MTN share prices about a couple of week after passage of the E-levy. In the past week, we saw another sharp decline in MTN price – below GH¢1 per share – after expiration of the ex-dividend date,” he explained.


He further stated that in addition to the levy’s expected impact on MTN’s financial performance and share price, general market sentiments could also be responsible for a fraction of the decline.

Rebound imminent

In spite of the market jitters beginning at the tail-end of 2021, MTN closed the year with active MoMo users increasing by 3.8 percent to 11 million, with a corresponding 38.2 percent rise in its revenue from MoMo to GH¢1.7billion for the period.

The telco continued its good run in the first quarter of 2022, posting growth in revenue – again driven largely by data and MoMo, with the contribution of Voice to service revenue beating expectations.

In the quarter, service revenue was up 34.5 percent to GH¢2.35billion and post-tax profit grew by 53.7 percent to GH¢707million.

MTN gained an additional 700,000 active mobile users, with mobile subscribers (+8.4 percent) and active data subscribers (+14.4 percent) closing the period at 27.1 million and 12.8 million respectively; all on a year-on-year basis.

This has left analysts feeling upbeat about the stock. In a note to investors, an analyst with asset management firm Databank, Gideon Amoaning-Kyei, stated that despite expectations MTN’s overall topline growth will moderate as the E-levy is expected to weigh on MoMo revenue growth in the short-term, MTN remains well-positioned to maintain its growth trajectory across key metrics.

“The key positive for us was the rapid growth in data revenues and strong increase in the data active subscriber base… We expect data revenue growth to remain robust as the economy shifts toward more data-driven solutions… We believe MTN will continue to deliver solid profitability along with a generous dividend payout, as it is well-positioned in a growing market given its large infrastructure base and wide coverage.”

On its part, MTN said regarding the E-levy, it “will continue to engage and collaborate with government and other stakeholders to ensure the industry’s long-term viability.”

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